In this article, I will feature one specialty chemicals company that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:
- The stock was sold by three or more insiders within one month.
- The stock was not purchased by any insiders in the month of intensive selling.
- At least two sellers decreased their holdings by more than 10%.
The Sherwin-Williams Company (NYSE:SHW) engages in the development, manufacture, distribution, and sale of paints, coatings, and related products to professional, industrial, commercial, and retail customers primarily in North America, South America, Europe, Asia, and the Caribbean region.
Insider selling during the last 30 days
Here is a table of Sherwin-Williams' insider activity during the last 30 days.
|Name||Title||Trade Date||Shares Sold||Rule 10b5-1||Current Ownership||Decrease In Ownership|
|Robert Wells||SVP||Feb 25-26||7,576||No||17,826 shares||29.8%|
|Steven Oberfeld||SVP||Feb 25||34,419||No||95,262 shares + 8,123 options||25.0%|
|Allen Mistysyn||VP||Feb 24||1,792||No||18,009 shares||9.1%|
|Robert Davisson||President, Paint Stores Group||Feb 24||6,293||No||26,412 shares||19.2%|
|David Hodnik||Director||Feb 21||1,337||No||12,172 shares||9.9%|
|John Morikis||COO||Feb 14||38,623||No||105,033 shares||26.9%|
|Timothy Knight||President, LACG||Feb 14||28,950||No||37,536 shares||43.5%|
|Thomas Hopkins||SVP||Feb 13||15,373||No||57,862 shares + 1,377 options||20.6%|
|Sean Hennessy||CFO||Feb 13||30,623||No||92,332 shares + 1,377 options||24.6%|
There have been 164,986 shares sold by insiders during the last 30 days.
Insider selling by calendar month
Here is a table of Sherwin-Williams' insider activity by calendar month.
|Month||Insider selling / shares||Insider buying / shares|
There have been 284,778 shares sold, and there have been zero shares purchased by insiders since January 2013. The month of February 2014 has seen the most insider selling.
Sherwin-Williams reported the full-year 2013 financial results on January 30 with the following highlights:
|Net income||$752.6 million|
Sherwin-Williams' guidance is as follows:
|Net sales growth||7%-12%||8%-13%|
|Company||SHW||DD||PPG||Industry Average (Specialty Chemicals)|
|Qtrly Rev Growth (yoy):||0.11||0.05||0.14||0.02|
|PEG (5 yr expected):||1.74||1.89||1.93||1.90|
Sherwin-Williams has the highest P/S ratio among these three companies.
Here is a table of these competitors' insider-trading activities this year.
|Company||Insider buying / shares||Insider selling / shares|
DuPont and PPG Industries have also seen intensive insider selling during the last 30 days.
There have been nine different insiders selling Sherwin-Williams, and there have not been any insiders buying Sherwin-Williams during the last 30 days. Seven of these nine insiders decreased their holdings by more than 10%. Sherwin-Williams has an insider ownership of 0.80%.
There are 11 analyst buy ratings, eight neutral ratings, and one sell rating with an average price target of $198.29. Before going short Sherwin-Williams, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are relatively high P/S ratio, bearish analyst price targets, and the intensive insider-selling activity.